The Norris Group Hard Money shares the latest headlines in the investing, Realtor, lender, builder, and mortgage industries every weekday. We then collect the news and share the top headlines via our videos every Friday.

Thursday, October 26, 2006

"The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month."

"The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record."

"Total existing-home sales – including single-family, townhomes, condominiums and co-ops – dipped 1.9 percent to a seasonally adjusted annual rate1 of 6.18 million units in September from a level of 6.30 million in August, and were 14.2 percent below the 7.20 million-unit pace in September 2005, which was the third strongest month on record."

"We expected a fairly steep decline in sales last month compared with a year ago, when sales were near their all-time record,” said C.A.R. President Vince Malta. “Unsold inventory is holding steady, and is close to the long-term historic average typical of a more ‘normal’ market."

"Going forward, the economy seems likely to expand at a moderate pace."It's the kind of forward-looking language that Fed Chairman Ben Bernanke seeks to use to give the public a better idea about Fed policy. It's purposely conditional, based on a forecast that may or may not come true. See full story.

"Sales of existing homes fell for a sixth straight month in September and the median sales price dropped on an annual basis by the largest amount on record, further documenting a lukewarm housing market."

Washington Post - "Stubborn sellers could harm housing sector" (10-24-06)"At a recent meeting with her Las Vegas real estate firm's 200 agents, Joanne Levy told them they needed to deliver a stark message to clients. They would tell them that unsold homes are at a record level and sellers need to lower their prices."

"Los Angeles is in the midst of a housing market slowdown, just a year after sellers were enjoying giddy times of bidding wars and multiple offers. Prices in Southern California rose in September at their slowest pace in nearly a decade. Realtors say there are several causes, but none more than greed."

"The rate of second-home ownership among 50- to 60-year-olds has remained flat during the 12-year period between 1992 and 2004, according to a report sponsored by Radian Group Inc. and the Research Institute for Housing America of the Mortgage Bankers Association. Early boomers were no more likely to own a second home than older generations of homeowners."

"The experts offered mostly positive outlooks for the 2007 economy and housing market for California, despite the expected drop in the median home price and a foreclosure report issued on Wednesday that showed the number of foreclosure notices sent to Californians rose to double what it was last year."

Sunday, October 22, 2006

"For the 22 business days ending Oct. 5, sales for all types of Orange County homes decreased 32.5 percent. The median sale price rose 1.3 percent. The median is where the half the homes sold for more and half for less. Types of homes selling, as well as home value changes, cause the median to change."

OC Register - "October home market starts slow" (10-22-06)"The home market didn't get any healthier in early October, DataQuick figures show. This probably will be the 12th straight month that sales volume fails to beat last year's pace. And the median price at $619,000 – for the 22 business days ending Oct. 5 – is 4.2 percent below June's record high of $646,000. For a breakdown go to blogs.ocregister.com/lansner/"

Recordnet.com - "'Wealth effect' on the rise" (10-21-06)Just when our false sense of wealth was waning along with the real estate market (as in, "What do you mean my house isn't worth a half-million?"), the Dow flirts with 12,000.

Saturday, October 21, 2006

" Mortgage lenders are making it easier to get loans even as the housing market cools -- and as the number of borrowers struggling to make their payments continues to rise, new studies show."

"In the latest sign that a cooling housing market and weaker credit standards are beginning to take their toll on borrowers and lenders, the number of past-due mortgages continued to rise in the three months ended Sept. 30, according to data from Equifax Inc. and Moody's Economy.com Inc."

"Celia Chen writes: Housing markets are sliding fast. Home sales are well off of last summer's peak, house prices are down on a year-ago basis, inventories are mounting, and leading indicators of housing activity suggest that the market will weaken further before it turns up. Indeed, by at least one indicator, conditions have sunk to the depths hit during the last housing bust in the early 1990s."

"Housing markets clearly need to correct to offset some of the excesses that have built up during the exceptionally strong boom of the last several years. The bad news is that the correction will take about one half of one percentage point off of GDP growth this year and another three quarters of a percentage point off of growth next year, as the slowing in housing hurts employment, construction activity and reverses the wealth effect."

"The good news is that the market is correcting, not crashing -- and other economic drivers are strong enough to withstand the hit."

"Nationwide housing starts in September regained the ground they lost in a steep decline the previous month, but issuance of building permits – a key indicator of future building activity – continued on a downward trend, according to numbers released by the U.S. Census Department today."

"September housing starts rose 5.9 percent to a seasonally adjusted annual rate of 1.77 million units, in close alignment with July’s 1.76 million-unit rate and the third quarter’s average of 1.74 million units. Single-family starts were up 4.3 percent to a rate of 1.43 million units, while multifamily starts were up 12.7 percent to a rate of 346,000 units."

"Residential foreclosure activity in California surged to its highest level in more than four years last quarter, the result of slower home sales and flattening prices, a real estate information service reported."

"Lending institutions sent 26,705 default notices to homeowners in the state during the three-month period ending in September. That was up 28.3 percent from 20,812 for the prior quarter, and up 111.8 percent from 12,606 for 2005's third quarter, according to DataQuick Information Systems."

"The rate of home price appreciation will post a modest decline next year following several years of steep increases, while the sales pace will decrease as the market stabilizes throughout 2007, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) '2007 California Housing Market Forecast' released today. The forecast will be presented this afternoon during the California REALTOR® EXPO 2006 (www.realtorexpo.org), running from Oct. 17 – 19 at the Long Beach Convention Center in Long Beach, Calif. The trade show attracts more than 12,000 attendees and is the largest state real estate trade show in the nation."

"Bay Area home prices fell on a year-over-year basis for the first time in more than four years last month. Sales were at their lowest level in five years, a real estate information service reported."

"The median price paid for a home in the nine-county Bay Area was $611,000 in September. That was down 1.5 percent from $620,000 for the month before, and down 0.8 percent from $616,000 for September last year, according to DataQuick Information Systems. "

"Breaking a string of eight consecutive monthly declines, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), which gauges builder sentiment in the single-family housing market, posted a modest one-point gain to stabilize at a level of 31 in October."

"Baby boomers have a wide variety of housing needs in the future, depending on their retirement plans – or lack thereof – according to a study by the National Association of Realtors®."

"Most of the 78 million baby boomers are far from retirement, with diverse plans and timelines, resulting in different housing requirements and significant shifts from patterns established by earlier generations. The comprehensive study is based on a survey of nearly 2,000 American baby boomers born between 1946 and 1964 – the largest generation in U.S. history; the survey was conducted for NAR by Harris Interactive®."

Bloomberg.com - "Countrywide's Borrowing Costs Rise as U.S. Home Slump Worsens" (10-16-06) "Investors are concerned that Countrywide, based in Calabasas, California, is expanding into the riskiest parts of the mortgage business just as the housing market slows. As much as $20 billion of the $118 billion in mortgages Countrywide made in the second quarter gave borrowers the option to defer full payments in the first few years, increasing the amount of debt owed."

"With all the dismal reports about the home real estate market, don't lose track of something critically important: Mortgage interest rates have been falling quietly but steadily for months and are now at their lowest level in half a year, barely a percentage point above 40-year lows."

Sunday, October 15, 2006

LA Times - "Some robust stats contradict the market-gone-bust reports" (10-15-06)"With all the dismal reports about the home real estate market, don't lose track of something critically important: Mortgage interest rates have been falling quietly but steadily for months and are now at their lowest level in half a year, barely a percentage point above 40-year lows."

OC Register - "Lennar isn't sweating a slump" (10-15-06)"As Lennar's top West Coast exec, he's in charge of one of the most aggressive gambles on Orange County real estate. Miami-based Lennar has a huge hand in projects reshaping Anaheim's sports district, the Jamboree corridor in Irvine, and old military bases at Tustin and El Toro."

"Southern California home prices rose last month at their slowest pace in nearly a decade and sales continued to plunge, according to data released Thursday. That helped prompt an increasing number of frustrated sellers to follow what Jose Morales just did: pull their homes off the market."

"After 90 days, four price reductions and a couple of low-ball offers, Morales withdrew his three-bedroom Riverside bungalow rather than cut his $415,000 asking price, already down from an original $486,000."

Real Estate Journal - "Investors Struggle With Aftermath Of Condo-Investing Fever" (10-13-06)"People camped out for the chance to buy a unit in Radius, a condominium development in Hollywood, Fla. The building's 285 units sold out in just over 10 hours -- half a year before construction was even set to start."

"But that was in the summer of 2004, when the red-hot condo market was peaking and money could be made by investing in condos expected to quickly appreciate. Units were often on the market for resale as soon as they were completed. It's a much riskier proposition to flip a condo in some of today's cooling markets. "You see some of these communities that investors purchased...there are no lights on at night," said Bill Donges, chief executive officer of Lane Company, developer of Radius, which is scheduled for completion in the spring."

"Through August, sales of existing homes in Orange County were off 29 percent compared to the same period a year ago, the largest year-over-year decline, according to the UCLA Anderson Forecast: Orange County Economic Outlook for 2007."

"Incentives, discounts are pervasive as market slows and inventories climb"

"Large home builders are dangling out more incentives to reluctant buyers as the roof caves in on the U.S. housing market. To entice customers, companies are serving up deals that include a free pool, a fancy kitchen or even a new car. But real-estate brokers say all buyers want is a cheaper house."

DQ News - "Continued slowdown for Southland home sales" (10-12-06)"Southland homes continued to sell at their slowest pace in nine years in September, the result of buyer reticence and a rebalancing of supply and demand. Prices are leveling off, a real estate information service reported."

"A total of 22,654 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 11.6 percent from 25,628 in August, and down 28.6 percent from 31,740 for September a year ago, according to DataQuick Information Systems."

"Last month saw 218 single-family homes change hands, a decline of nearly 34 percent from the year before and the first time in three years that sales were below the 300 mark for September, according to the association. The median price for single-family homes fell 1.6 percent, from $594,500 to $584,900."

"Condominium sales fell 37 percent, with 109 sales compared with 173 for the previous year, according to the association. But in one positive trend, the median price of condos increased 1.3 percent, from $379,900 to $385,000."

Thursday, October 12, 2006

LA Times - "Lending Slumps at Countrywide" (10-12-06)"Countrywide Financial Corp. said Wednesday that its third-quarter mortgage production tumbled 22%, but applications for new loans rose in September as interest rates declined."

"Thanks to a 19 percent increase in foreclosure activity, California leapfrogged past Texas and Florida to report the most new foreclosure filings of any state in September, it says. The state documented 14,806 properties entering some stage of foreclosure, nearly three times the number reported in September 2005 and a foreclosure rate of one new foreclosure filing for every 825 households -- 1.3 times the national average. The state's foreclosure activity has risen more than 40 percent over the last two months."

The Tribune - "Mortgage fraud rises in cooling housing market" (10-10-06)"Mortgage crime is the fastest growing white collar crime in America, according to the Federal Bureau of Investigation. An increase in the illegal activity has accompanied the housing market’s upswing. Yet even as the market slows, fraud is as big an issue as ever."

MBA - "Mortgage Applications Decrease in Latest Survey" (10-11-06)"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending October 6. The Market Composite Index, a measure of mortgage loan application volume, was 599.1, a decrease of 5.5 percent on a seasonally adjusted basis from 633.9 one week earlier. On an unadjusted basis, the Index decreased 5.3 percent compared with the previous week and was down 13.3 percent compared with the same week one year earlier."

"The refinance share of mortgage activity decreased to 46.4 percent of total applications from 46.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 26.9 percent of total applications from 27 percent the previous week."

OC Register - "Declining sales slow economy" (10-11-06)"U.S. housing sales are declining at a greater-than-expected pace that will shave one percentage point off economic growth in the second half of 2006, Freddie Mac said in a forecast Tuesday."

OC Register - "Declining sales slow economy" (10-11-06)"U.S. housing sales are declining at a greater-than-expected pace that will shave one percentage point off economic growth in the second half of 2006, Freddie Mac said in a forecast Tuesday."

"David Lereah, NAR’s chief economist, said the housing market is showing signs of life and that sales may be leveling out. 'Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices,' he said. 'Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year.'"

"San Diego County home prices dropped last month by nearly 4.5 percent, double the rate in August and the biggest year-over-year decline since 1993, DataQuick Information Systems reported Wednesday."

"The $476,000 overall median was down $6,000 from August and off $22,000 from September last year, the biggest year-over-year dollar reduction DataQuick has reported since it began keeping local records in 1988."

Voice of San Diego - "Home Sales, Prices Down Again" (10-11-06)"Sales in September for detached resale homes were down 16.2 percent from August and 33 percent from last September throughout the county, according to the HomeDex report released today by Robert Brown, an economist at the University of California, San Marcos."

"Its cancellation rate for the latest quarter rose to 40%, up from 29% the prior year. D.R. Horton said it will release fourth-quarter earnings on Nov. 14."

" Also Tuesday, KB Home said quarterly orders fell 43% from a year earlier as the company delayed filing full financial results for the third quarter to complete an internal review of stock-option grants."See related story

Tuesday, October 10, 2006

Real Estate Journal - "Buy a Newly Built Home Now Or Wait for Prices to Fall Some More?" (10-9-06)"Question: I am purchasing a new home just outside Los Angeles. But like everyone else, I am worried the bubble will pop. I reserved the house in February of this year, so the house has gained $20,000 just on the base price, but I added options that brought the house's price and value up. Should I get out of the house and wait for the market in this area to fall, or am I safe with the current market?"

Real Estate Journal - "Builders' Shares Have Been Hot, Sparking Debate Among Investors" (10-10-06)"The Dow Jones Wilshire U.S. Home Construction Index of home-builder stocks has increased about 15% since July 18 -- even as each passing week shows the nation's housing statistics heading down. While the index is still down for the year, that recent rise has outpaced broader market indexes and set off a debate among investors about whether the slowdown might end sooner for the home builders than many expect."

"The housing boom is over, and forecasters don't expect to see more single-family building permits in 2007 than this year, according to the Western Blue Chip Economic Forecast by the JPMorgan Chase Economic Outlook Center at ASU."

"But that's not all bad, McLaren said. Prices are holding steady. Arizona's population will continue to grow and houses are always in demand."

"At Kara Homes, we've just completed the two most profitable quarters in the history of our company," Karagjozi said. "We've taken advantage of this temporary lull to reevaluate our business plan, streamline our operation and prepare for the market recovery which some experts are predicting will begin either later this year or in the first part of 2007."

" In an internal memo to employees dated Oct. 3, Chief Executive Ara K. Hovnanian said an unspecified number of staff reductions were necessary in order 'to remain healthy,' as the nation's eighth-largest U.S. home builder grapples with the broad downturn plaguing its industry."

"Savvy investors know that there's money to be made in good times and bad. Slowing home sales have wags predicting opportunities in one of the saddest segments of a falling real estate market: foreclosures."

"Norris says, however, that a subject-to purchase can offer advantages. The homeowner escapes the loan burden and may receive some money. The buyer may obtain a lower interest rate than current market rates without qualifying for a loan and may buy property under market value. The lender doesn't have to incur foreclosure, auction, eviction or vacant-property costs."

Friday, October 06, 2006

Real Estate Journal - "Prices in 100 U.S. Cities Expected To Decline for Next Few Years" (10-6-06)" In the latest news from the slumping U.S. housing market, a report released this week says that median house prices are likely to decline more than 10% over the next few years in 20 metro areas, including Las Vegas, Tucson, Ariz., and Washington, D.C."

Dear Mr. Berko: I'd like your thoughts on buying three condo-hotels at $625,000 each. These units recently sold for $675,000, but the developer is closing out. He said the units could easily be rented 30 weeks out of the year, and the hotel management company is the best in the business. This looks like a superb investment that would easily pay all my costs, including mortgages on the three properties. The developer will also give me a $33,000 cash bonus if I buy the three condo-hotels, which I could use to pay the cost of a limo driver who would pick up the renters at the airport. What do you think of this idea? It's like having three second homes and it won't cost me a dime.

"The survey of 1,003 people, conduct nationwide in September and announced at meeting in Orlando, also found that 25 percent of homeowners have already paid off their mortgage -- twice the number of people with risky variable and interest-only mortgages (13 percent)."

"More than 80 percent of all homeowners surveyed have at least $50,000 of equity built up in their homes and almost 60 percent believe they have at least $100,000 of equity in their homes."

DSNews - "Economy.com Study Forecasts Housing Price Crash " (10-4-06)"House prices in many U.S. cities could experience double-digit drops over the next two years, according to a new study, 'Housing at the Tipping Point,' released today by Moody's Economy.com."

"According to Moody's Economy.com, by late 2008, the Inland region will have experienced among the steepest declines of 379 metropolitan areas in the country and will be among 20 areas where prices for single-family homes on the resale market will fall by double digits."

For those of you who live in the Riverside area, City Council also just passed a $780 million dollar improvement campain squeezing about 20-30 years of fixes into five in hopes of attracting new business. If you thought traffic was bad already, hold onto your hats! They call it the Riverside Renaissance.See article.

Tuesday, October 03, 2006

YAHOO - "Forecast sees housing prices falling" (10-3-06)"Housing prices, slumping after a five-year boom, are projected to decline in half of the nation's metropolitan areas, with the Northeast, Florida and California among the areas hardest hit."

"The forecast by Moody's Economy.com, a private research firm, presents one of the starkest views yet of the housing slowdown that has been gathering force in recent months."

In Business Las Vegas - "Home sales, sweet home sales: Builders plot strategies" (9-29-06)"Because of the high cost of land, builders have shied away from making major purchases knowing that prices are already a factor in keeping people out of the new housing market, Perlman said. Builders are looking for land that helps keep their costs in check, he said."

About Me

Bruce Norris is an active investor, hard money lender, and real estate educator with over 30 years experience. Bruce has been involved in over 2,000 real estate transactions as a buyer, seller, builder and money partner.

Renowned for his ability to forecast long-term real estate market trends and timing, the release of TheCalifornia Comeback in 1997 gained him much notoriety and its accuracy of the extensive report led many California investors to financial freedom. His January 2006 release, The California Crash, is an in-depth look into the California market correction and the statistics behind Bruce’s predictions. His latest award winning report, Category 5, goes into great detail why Bruce isn’t ready to call California Comeback 2 and what the real estate community should expect in the coming two years as the market continues its correction.

Bruce speaks and debates throughout California and has been a guest speaker at the California Builders Industry Association, California Association of Mortgage Bankers, The Financial Executives Networking Group, the Southern California Appraisal Institute, the Apartment Owners Association, the Real Estate Research Council, numerous California Realtor associations, the local Chamber of Commerce, and several local and national investment clubs. In late summer of 2008, Bruce hosted the I Survived Real Estate 2008 fundraiser bringing together top industry segment leaders to discuss the current state of California real estate market which benefited the Susan. G. Komen for the Cure Foundation.

Bruce is host of The Norris Group Real Estate Radio Show on KTIE 590am where he interviews real estate industry leaders and economists. Guests have included Frank Nothaft with Freddie Mac, Peter Schiff of Euro Pacific Capital, Leslie Appleton-Young and Joel Singer with C.A.R., Alan Nevin with the CBIA, RealtyTrac, PIMCO, PMI Group, REDC, HUD, the National Auctioneers Association, and the Center for Responsible Lending to name a few. For a complete list of past guests, visit the website at www.TheNorrisGroup.com. The show won a Platinum Hermes Creative Award in 2009.

Bruce has contributed articles to many real estate magazines and newsletters including RealtyTrac’s Foreclosure Newsletter, The Business Press, Creative Real Estate Magazine, The Orange County Register, AOA Magazine, and the Daily Commerce. He has also been featured in The Wall Street Journal, Fox Business News, The New York Times, Good Morning America, the Los Angeles Times, Fortune,Mortgage Banker Magazine, Money Magazine, Reuters, Associated Press, The Orange County Register, The Tribune, and numerous others.